Lessons Learned from Price Transparency Pioneers

By Lola Butcher

Although their transparency efforts have not worked out exactly as expected, finance leaders at two health systems say posting price information has served their organizations well.

Spectrum Health, a nine-hospital system serving western Michigan, began posting gross charges and average payments for hundreds of medical, surgical, and diagnostic procedures in 2007. That same year, Alegent Creighton Health, a 10-hospital system based in Omaha, launched its MyCost online tool, which allows patients to obtain the estimated total cost—and their out-of-pocket responsibilities—for nearly 700 procedures.

Alegent patients are completing about 20,000 MyCost calculations each year, and CFO Scott Wooten is pleased with that level of use. At Spectrum, the online charge and payment information has not generated much interest from patients, but Joseph Fifer, former vice president-hospital finance, considers the effort to be worthwhile.

"We have not received as many views by patients as we wanted, but it did establish a direction and pave the way for other things that we are doing within our revenue cycle," says Fifer. "If I rolled back the tape and started over again, I would do the same thing."

When they first published online price information, Fifer and Wooten expected that other health systems would follow their lead, allowing patients to compare their facilities with others in the market. That has not happened—yet.

"I'd be disappointed if we as an industry don't move in that direction," says Fifer, who is now the president and CEO of HFMA. "But I can't make any predictions because I thought it would move faster than it already has."

Posting Gross Charges

Spectrum Health's online information is targeted to self-pay patients and those with high-deductible health plans or health savings accounts who want a general idea of hospital prices before they schedule a service.

The average Medicare payment that Spectrum Health receives for this procedure

The average Medicaid payment that Spectrum Health receives for this procedure

The average payment that Spectrum Health receives from health insurance companies

The site does not help most Spectrum Health patients determine their out-of-pocket costs. However, Spectrum does offer an online cost estimator for nearly 600,000 patients covered by Priority Health,Spectrum Health's affiliated insurance company. "When we unveiled this, I keyed in my Priority Health number and picked an MRI procedure-and the whole process, from getting access to the website to getting my out-of-pocket estimate, took just 30 seconds," says Fifer.

He identified three other benefits that have emanated from Spectrum Health's decision to post its charge and payment data:

Culture of transparency. "It sets a tone within the organization that is very positive," he says. "Instead of having one or two people thinking transparency is important, we've got hundreds of people in our revenue cycle-all the way down to the patient registrars- who believe it's vital."

An opportunity to engage with patients about their financial responsibilities. After it began posting price information online, Spectrum Health began offering to provide an out-of-pocket estimate to every patient during a pre-arrival insurance verification telephone call. "If a patient know his responsibility going in, then we can start working on a game plan for him to satisfy it," he says.

Reputation. "This was one of several items, and it was not an insignificant one, that has helped us become known as a transparent organization," says Fifer. "And there's a real benefit that has come from that changed perception within the business community here."

Providing Out-of-Pocket Estimates

Alegent Creighton Health took a different tact when it developed its
MyCost calculator, which uses its charges and the details of a patient's insurance coverage and deductible status to deliver an out-of-pocket estimate. "This was part of an overall transparency effort to educate and engage consumers and put them in the driver's seat," says Wooten.

MyCost was an expensive undertaking—Alegent spent about $1 million developing it between 2006 and 2007-because of the complexity associated with integrating its own data with that from several insurance companies. "Nothing is standardized, so every time we set up with a payer, it is a custom job," says Tim Meier, CFO, Bergan Mercy Medical Center and Midlands Hospital, Omaha, Neb.

Meier was one of the architects of the MyCost service, which was developed without any ROI expectations. "Our CEO had a vision and a passion around consumerism and engaging consumers and transparency," says Wooten. "Without that, it's hard to prioritize spending the money."

Alegent's MyCost links to payer databases, which allows real-time insurance verification for about 90 percent of its patients. It takes another level of data integration to provide out-of-pocket estimates that reflect a patient's benefits and deductible status. MyCost can deliver tailored estimates for patients insured by Aetna, Blue Cross Blue Shield, CIGNA, Coventry Healthcare of Nebraska, the Iowa Medicaid program, Medicare, and United Healthcare. Altogether, that accounts for about 70 percent of Alegent's patients.

For surgical and medical procedures, MyCost provides facility-only information. But when patients requested a fuller picture of their out-of-pocket costs, Alegent approached its independent radiology groups and won their cooperation.

"That doesn't sound like a big deal since the infrastructure was already built, but it was basically like starting over," says Meier. "The payers don't have all that information in one file. There's a physician file and there's a hospital file, and those two files are completely different."

MyCost is designed to allow patients to check whether they might be qualified for financial assistance or charity care, so the addition of cost information from independent radiologists who did not have financial assistance or charity care policies posed a potential problem-which turned into an opportunity for patients. "The radiologists agreed to follow our financial assistance policy on their own claims so we could integrate the information," says Meier. "We were pretty pleased with that."

Radiology providers take care of the most procedures for which patients are seeking upfront cost information, which is why Alegent partnered with radiologists for the MyCost program, and not other physician specialists.

Although underinsured and uninsured patients were not the audience that Alegent had in mind when MyCost was developed, about half of the patients who use the tool are uninsured. The tool includes a questionnaire to identify which of those patients might be eligible for Medicaid or another state aid program.

If an uninsured person is not likely to qualify for state aid, MyCost uses the details of Alegent's financial assistance policy to calculate an estimate of his or her discounted out-of-pocket responsibility. For patients who may qualify for 100 percent charity care, MyCost notifies them that they may be eligible for "significant financial assistance" and asks them to call the business office for more information. "Basically, this opens up that dialogue prior to services being done, and we're not always chasing the patient down afterwards," says Meier.

Delivering Surprises

Like Spectrum Health, Alegent Creighton Health has found that MyCost delivered some nice surprises. For one thing, it significantly reduced the nursing hours required to figure out-of-pocket estimates. "Before MyCost, every one of those estimates had to go through a registered nurse, so the tool is generating savings in that aspect," says Meier.

For another, Wooten says MyCost has helped Alegent Creighton Health prepare for the future, whether that means participating in accountable care organizations or data reporting tied to health reform. "It's helped us embrace the idea of transparency more," says Wooten. "It just gets back to the question: 'Do you want to help lead in that effort, or do you just want to maintain status quo and respond when someone else does?'"

Lola Butcher is a freelance writer and editor based in Missouri.

Interviewed for this article:

Joseph Fifer is former vice president-hospital finance, Spectrum Health, Grand Rapids, Mich. He assumed the role of HFMA president and CEO in June 2012.

Although their transparency efforts have not worked out exactly as expected, finance leaders at two health systems say posting price information has served their organizations well.

Spectrum Health, a nine-hospital system serving western Michigan, began posting gross charges and average payments for hundreds of medical, surgical, and diagnostic procedures in 2007. That same year, Alegent Creighton Health, a 10-hospital system based in Omaha, launched its MyCost online tool, which allows patients to obtain the estimated total cost—and their out-of-pocket responsibilities—for nearly 700 procedures.

Alegent patients are completing about 20,000 MyCost calculations each year, and CFO Scott Wooten is pleased with that level of use. At Spectrum, the online charge and payment information has not generated much interest from patients, but Joseph Fifer, former vice president-hospital finance, considers the effort to be worthwhile.

"We have not received as many views by patients as we wanted, but it did establish a direction and pave the way for other things that we are doing within our revenue cycle," says Fifer. "If I rolled back the tape and started over again, I would do the same thing."

When they first published online price information, Fifer and Wooten expected that other health systems would follow their lead, allowing patients to compare their facilities with others in the market. That has not happened—yet.

"I'd be disappointed if we as an industry don't move in that direction," says Fifer, who is now the president and CEO of HFMA. "But I can't make any predictions because I thought it would move faster than it already has."

Posting Gross Charges

Spectrum Health's online information is targeted to self-pay patients and those with high-deductible health plans or health savings accounts who want a general idea of hospital prices before they schedule a service.

The average Medicare payment that Spectrum Health receives for this procedure

The average Medicaid payment that Spectrum Health receives for this procedure

The average payment that Spectrum Health receives from health insurance companies

The site does not help most Spectrum Health patients determine their out-of-pocket costs. However, Spectrum does offer an online cost estimator for nearly 600,000 patients covered by Priority Health,Spectrum Health's affiliated insurance company. "When we unveiled this, I keyed in my Priority Health number and picked an MRI procedure-and the whole process, from getting access to the website to getting my out-of-pocket estimate, took just 30 seconds," says Fifer.

He identified three other benefits that have emanated from Spectrum Health's decision to post its charge and payment data:

Culture of transparency. "It sets a tone within the organization that is very positive," he says. "Instead of having one or two people thinking transparency is important, we've got hundreds of people in our revenue cycle-all the way down to the patient registrars- who believe it's vital."

An opportunity to engage with patients about their financial responsibilities. After it began posting price information online, Spectrum Health began offering to provide an out-of-pocket estimate to every patient during a pre-arrival insurance verification telephone call. "If a patient know his responsibility going in, then we can start working on a game plan for him to satisfy it," he says.

Reputation. "This was one of several items, and it was not an insignificant one, that has helped us become known as a transparent organization," says Fifer. "And there's a real benefit that has come from that changed perception within the business community here."

Providing Out-of-Pocket Estimates

Alegent Creighton Health took a different tact when it developed its
MyCost calculator, which uses its charges and the details of a patient's insurance coverage and deductible status to deliver an out-of-pocket estimate. "This was part of an overall transparency effort to educate and engage consumers and put them in the driver's seat," says Wooten.

MyCost was an expensive undertaking—Alegent spent about $1 million developing it between 2006 and 2007-because of the complexity associated with integrating its own data with that from several insurance companies. "Nothing is standardized, so every time we set up with a payer, it is a custom job," says Tim Meier, CFO, Bergan Mercy Medical Center and Midlands Hospital, Omaha, Neb.

Meier was one of the architects of the MyCost service, which was developed without any ROI expectations. "Our CEO had a vision and a passion around consumerism and engaging consumers and transparency," says Wooten. "Without that, it's hard to prioritize spending the money."

Alegent's MyCost links to payer databases, which allows real-time insurance verification for about 90 percent of its patients. It takes another level of data integration to provide out-of-pocket estimates that reflect a patient's benefits and deductible status. MyCost can deliver tailored estimates for patients insured by Aetna, Blue Cross Blue Shield, CIGNA, Coventry Healthcare of Nebraska, the Iowa Medicaid program, Medicare, and United Healthcare. Altogether, that accounts for about 70 percent of Alegent's patients.

For surgical and medical procedures, MyCost provides facility-only information. But when patients requested a fuller picture of their out-of-pocket costs, Alegent approached its independent radiology groups and won their cooperation.

"That doesn't sound like a big deal since the infrastructure was already built, but it was basically like starting over," says Meier. "The payers don't have all that information in one file. There's a physician file and there's a hospital file, and those two files are completely different."

MyCost is designed to allow patients to check whether they might be qualified for financial assistance or charity care, so the addition of cost information from independent radiologists who did not have financial assistance or charity care policies posed a potential problem-which turned into an opportunity for patients. "The radiologists agreed to follow our financial assistance policy on their own claims so we could integrate the information," says Meier. "We were pretty pleased with that."

Radiology providers take care of the most procedures for which patients are seeking upfront cost information, which is why Alegent partnered with radiologists for the MyCost program, and not other physician specialists.

Although underinsured and uninsured patients were not the audience that Alegent had in mind when MyCost was developed, about half of the patients who use the tool are uninsured. The tool includes a questionnaire to identify which of those patients might be eligible for Medicaid or another state aid program.

If an uninsured person is not likely to qualify for state aid, MyCost uses the details of Alegent's financial assistance policy to calculate an estimate of his or her discounted out-of-pocket responsibility. For patients who may qualify for 100 percent charity care, MyCost notifies them that they may be eligible for "significant financial assistance" and asks them to call the business office for more information. "Basically, this opens up that dialogue prior to services being done, and we're not always chasing the patient down afterwards," says Meier.

Delivering Surprises

Like Spectrum Health, Alegent Creighton Health has found that MyCost delivered some nice surprises. For one thing, it significantly reduced the nursing hours required to figure out-of-pocket estimates. "Before MyCost, every one of those estimates had to go through a registered nurse, so the tool is generating savings in that aspect," says Meier.

For another, Wooten says MyCost has helped Alegent Creighton Health prepare for the future, whether that means participating in accountable care organizations or data reporting tied to health reform. "It's helped us embrace the idea of transparency more," says Wooten. "It just gets back to the question: 'Do you want to help lead in that effort, or do you just want to maintain status quo and respond when someone else does?'"

Lola Butcher is a freelance writer and editor based in Missouri.

Interviewed for this article:

Joseph Fifer is former vice president-hospital finance, Spectrum Health, Grand Rapids, Mich. He assumed the role of HFMA president and CEO in June 2012.

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